Letting Agent’s Commission Terms Unfair


Unclear language in a letting agent’s standard terms and conditions has led to a contract being set aside by the High Court.
The case concerned the estate agent Foxtons, which provides a lettings service to private landlords under a standard form of agreement. The Office of Fair Trading (OFT) had applied to the Court for orders against Foxtons for what the OFT deemed to be unfair terms in agreements between the estate agents and various landlords. The terms in question related to renewal commissions.
Foxtons hoped to rely on regulations passed in 1999 relating to unfair terms in consumer contracts. These stipulate that where a term is in ‘plain intelligible language’, the assessment of fairness of a term shall not relate to the price or remuneration as against the goods or services supplied in exchange.
The Court held, however, that the relevant terms for renewal commission within the old version of Foxtons’ contract had not been drafted in plain and intelligible language and so the obligation to pay renewal commission under the relevant terms of the agreement did not escape a fairness test under the regulations.
As far as the actual fairness of the terms was concerned, the Court considered it unlikely that the typical private landlord would expect a repeat bill in year two of a letting and beyond unless the point was spelled out in some way. It was felt that Foxtons had not used a fair and adequate method of bringing the renewal commission clause to the attention of the landlords.
Under the circumstances, the renewal commission clauses of Foxtons’ old standard terms and conditions were held to be unfair.
The Unfair Terms in Consumer Contracts Regulations 1999 can be found at http://www.opsi.gov.uk/si/si1999/19992083.htm.

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